ALEXANDRIA, Va.—NCUA is “seriously considering” separating the interest rate risk piece from its current risk-based capital proposal and making it a standalone proposal of its own, according to CUNA.
The trade group is offering that view following meetings between The American Association of Credit Union Leagues' (AACUL) Regulatory Advocacy and Compliance Advisory Committee and officials with the agency. CUNA and others have argued that IRR should not be a consideration in the risk weightings in the risk-based capital proposal. NCUA is looking to update its current IRR efforts, most especially the largest credit unions, where IRR could cause a credit union to become under-capitalized in certain economic situations.
In a May comment letter to NCUA, CUNA had written, "By focusing exclusively on concentrations of longer-term assets, the proposal fails to account for how the maturity structure of liabilities can mitigate interest-rate risk. Further, it does not follow the general approach of Basel with respect to interest-rate risk.”
The risk-based capital proposal is currently undergoing a reworking and will be opened to a second comment period, according to NCUA.
Representing the AACUL at the NCUA meeting were Pat Sowick, AACUL SVP-league relations; John Trull, director of regulatory advocacy with the Northwest CU Association; Greg Michlig, president/CEO of the New Jersey league; Paul Gentile, CEO of the Massachusetts/New Hampshire/Rhode Island leagues; Ken Ross, COO of the Michigan league; Patrick Smith, VP-communications and regulatory affairs with the Illinois league; Scott Simpson, president of the Utah Credit Union Association; Mary Dunn, CUNA deputy general counsel; and Patrick La Pine, president/CEO of the League of Southeastern Credit Unions. Among those from NCUA meeting with the group was NCUA Chairman Debbie Matz.